Another “Temporary” Tax

Another “Temporary” Tax

In order to balance it’s budget, New York State has raised taxes yet again. New York Governor David Patterson announced some “temporary” increases in the state income tax. For those who make over $500,000, the state income tax is going up by 31%. For the average New Yorker, their taxes are going up on average $5,000!

In 1898, the United States went to war with Spain. In order to finance that war, a “temporary” tax was placed on long distance phone service. This 3% tax was considered a luxury tax and as only supposed to be “temporary.” The tax lasted 97 years. It was repealed only in 2005 and only because of a lawsuit the government lost.

Rush Limbaugh reacted to the news on his show by announcing he would no longer do his show in New York City. Limbaugh mostly broadcasts from southern Florida, but occasionally has to evacuate for hurricanes. His backup studio is in New York City. While Limbaugh certainly makes a show of his displeasure and enjoys nailing the democrats, his complaint is a symptom of a greater problem.

Basic economics teaches us that everyone acts in their own self-interest. Taxes are a disincentive to production. Why work 80 hours a week when you can work 40 hours a week and make the same money? Why live in New York when you can live in Nashville, make the same money and pay a fraction of the taxes? That is why talented people are fleeing the high tax states and heading to the “red” states, which have low tax rates.

Former British Prime Minister Margaret Thatcher once said, “The problem with socialism is that eventually, you run out of other people’s money.”

That is a lesson New York is about to learn.

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